Federal Loan Consolidation Vs Government Loan Consolidation
People are sometimes confused by the terms’ Federal Loan Consolidation and Government Loan Consolidation. In this article, we will explore the differences between these two programs and how you can apply for Federal Loan Consolidation.
First of all, let’s start with the term ‘Federal Loan Consolidation’. It is a program set up by the federal government to help people struggling to make ends meet. The program provides assistance to debtors who are getting debt relief in one of two ways – debt consolidation or debt settlement.
In debt consolidation, you will be receiving financial help from the creditor (e.g. your credit card company) to pay off all your debts. In debt settlement, you will get a single reduction in your debt – that is, a debt reduced by a third or more.
Since the Federal Loan Consolidation program was introduced in the mid-90s, it has helped millions of people get debt relief. However, despite its success, many people do not realize that they can get a debt settlement or consolidation deal too.
Another term used for the consolidation program is Federal Pay As You Earn plan. The purpose of this plan is to help people repay loans after they have finished working.
Debt settlement is not a consolidation program in itself, but a negotiation process. If the creditors agree to settle your debt, then they will usually reduce the debt amount.
Looking for a consolidation loan
So, if you are looking for consolidation, you should be looking at the process of debt settlement as well. Another important point to note is that the federal program also makes some concessions to those who have been denied financial assistance. For instance, for those who cannot afford the consolidation, they can get an extension to pay for the payments.
The two programs work very differently. Consolidation is a means to get debt relief, while debt settlement is a process that aims to save people from bankruptcy.
Once you have decided on which option you want to take, you can always visit a debt consolidation company to provide you with a free consultation. The company can also help you find the best consolidation loan for you – if you are someone who is thinking about going this route.
What are my options if I’m debt free?
However, if you are already debt-free, there are many more options for you. The government has also made some changes in debt relief grants, so now you can also avail of these grants to help you manage your debt.
But remember that if you are an American citizen, you can apply for Federal Loan Consolidation. In fact, these two programs are usually combined into one: Federal Pay As You Earn program (you can use debt settlement or consolidation if you qualify) and also apply for Federal Loan Consolidation.
These two programs are funded by the government, and as such you can definitely apply for Federal Loan Consolidation. Be sure to apply early – the earlier you apply, the better.